Scottish Independence - In a bind over ties

Thread Rating:
  • 0 Vote(s) - 0 Average
  • 1
  • 2
  • 3
  • 4
  • 5
#1
In a bind over ties
James Chessell
1558 words
6 Sep 2014
The Australian Financial Review
AFNR
English
Copyright 2014. Fairfax Media Management Pty Limited.
Independence As the long-awaited Scottish plebiscite nears, economic arguments loom large, writes James Chessell in Edinburgh.
Alan Russell coaches tennis in the Scottish town of Dunfermline, about 24 kilometres from Edinburgh, training the next generation of aspiring Andy Murrays. The 59-year-old considers himself Scottish "primarily" but also British. Even so he won't be voting "yes" when more than 3.3 million Scots are expected to have their say on whether they should remain part of the United Kingdom.
The September 18 referendum poses all sorts of questions about national identity at a time when the internet, cheap airfares and, in the case of Europe, freedom of movement are meant to be eroding the importance of borders. Polls have consistently suggested that most Scots will vote to stay in their 307-year old union with the UK, but a late surge to the independence campaign has rattled shares in companies like Royal Bank of Scotland as well as the British pound.
Russell, whose plan to vote against secession puts him for now in the majority, sees no contradiction in being part of two national communities.
He was proud, not just when Murray won gold at the London Olympics in 2012, but for the contribution of Scottish athletes to Team GB's overall medal haul. Russell will always support the Scottish rugby team. But if the British & Irish Lions are touring Australia, he will line up "very enthusiastically" with fans from all corners of the UK and Ireland.
"I would consider the Welsh and Irish and English as being kindred and cousins and close," he says. "We often draw parallels between our relationship with England and that of New Zealand with Australia, but I think it is inherently different. I just can't see how in an age of globalisation, consolidation and sharing that it can make sense to fragment and splinter and duplicate."Economic forces crucial
Russell is not alone in nominating economic forces as a deciding factor. The independence debate has been emotional and bad-tempered at times. There is some truth to what Scottish commentator Deborah Orr describes as the "knee-jerk, sentimental, victim-mentality, hate-the-English-colonisers patriotism that some Scots display".
But polls and surveys have repeatedly shown that regardless of their views on Scotland's place in world – even if they support independence – voters will make their choice based on more pragmatic reasons.
"National identity is of course correlated to 'yes' and 'no' voting a little bit," says Jan Eichhorn from the University of Edinburgh's School of Social and Political Science. "But what is much more important to people is the question of what will happen to Scotland's economy after the referendum."
It is for this reasons the Better Together campaign has built its case on the issue of macroeconomic risk. Led by the former Labour chancellor Alistair Darling, and backed by the three main British political parties, the pro-union supporters warn a vote for independence means weakening Scotland's banks, losing the pound and eroding the public service. They insist with some justification the Scottish population is on average older and less healthy and gets more public spending than the rest of the UK.
And then there are the dangers of dwindling income from North Sea oil. While an independent Scotland would get a great share of the oil reserves due to its geography – a key selling point for the Yes campaign – there is one drawback: production has fallen steadily since 1999. Santos chief executive David Knox is one of many Australian business figures with ties to Scotland who is worried about an economy relying too heavily on just one industry.
Knox grew up and studied in Edinburgh and considers himself Scottish, British and Australian. His first job was with Shell working on the Brent Bravo platform in the North Sea more than 30 years ago.
Business leaders are not fond of uncertainty and Knox's personal view is no different. "I really struggle to see the benefits of independence," he says.
"Often it's talked about in terms of oil but you have to remember, if we look forward, Scotland's oil production is going to halve over the next 10 years.
"I think there is a compelling case that it is better off as part of a much larger country, stronger financial system, better wealth flows, better income flows. That will result in far more jobs."
For his part, Scottish First Minister Alex Salmond argues an independent Scotland would be more prosperous – "the 14th wealthiest nation among the developed countries in the OECD" he claims. For Scotland to get its proper slice of the economic pie, he argues there must be a clean break from the uncaring politics of Westminster.Resentment a focus
Salmond has largely skirted technical questions about issues such the currency union and focused instead on resentment over the impact of conservative policymaking stretching back to Margaret Thatcher on Scotland's industry and social democratic values. "Yes Scotland" may be positive name for a campaign but it might as well be "No London". As Salmond claimed in April: "The attraction of capital and talent to London is now one of the defining features of the UK economy."
The arguments made by Salmond, a former bank economist, are just as pragmatic. An independent Scotland will still celebrate the Queen's Birthday, just at it did for a century before the parliamentary union of 1707, but the economic levers will be pulled in Edinburgh.
Would an independent Scotland manage its economy any better than London? Until this week it seemed the answer was academic. An endless series of polls suggested the No campaign enjoyed a solid lead. Bookmakers were predicting the chances of Scotland breaking away from the UK were less than 20 per cent.
This changed, however, on Tuesday, when a YouGov survey put the Better Together lead at just 6 percentage points (not including undecided voters), down from 22 points less than a month ago and 14 points in mid-August. With two weeks to go, the race was on again.
The pound fell as investors bought protection against a sharp drop in sterling in the event of Scotland seceding. All three UK parties say they would not agree to a shared currency. Salmond claims, not convincingly, they would change their tune if his side gets up. Meanwhile, shares in companies with operations on both sides of the border such as Royal Bank of Scotland were sold off. Prime Minister David Cameron was asked if he would resign if Scotland walked away from Britain. He said no, but admitted it "would break my heart if Scotland were to leave the UK". Threat to Cameron
A No vote may also break his government at next year's general election. There is just one Tory MP in Scotland (Nationalists like to point out there are twice as many pandas in the Edinburgh zoo) and Scottish conservative leader Ruth Davidson has even talked down Cameron's chances of winning the next UK general election given his unpopularity north of the border. Even a Yes vote will cause problems, given Scottish MPs will still be elected next year because the formal breakup is not due until 2016 at the earliest. There is speculation Cameron may face calls to postpone the election, an unprecedented decision in peacetime Britain.
The first genuine market reaction to the prospect of Scottish independence is a reminder of the broader implications of the referendum. The sun may have set on the British empire but it still has a strong voice in international affairs due to its permanent membership of the UN Security Council, the G7 and the G20. Losing 5.3 million Scots from a union of 63.1 million people will not put these positions in danger but will curb UK influence.
The ramifications extend beyond the UK. EU bureaucrats have been watching with growing unease, knowing a Yes vote will give the movements for Catalan and Flemish independence movements in Spain and Belgium renewed vigour. With anti-European sentiment running high, it is easy for these groups to generate political momentum.
Michael Bryce was, until recently, the patron of the Scottish Australian Heritage Council. The husband of former governor -general Quentin Bryce was born in Australia but retains attachment to Scotland through his family heritage. "I go to Scottish dinners and we sing Scottish songs and we wear kilts. It stirs my blood. I think this decision is for people who are born in Scotland or live in Scotland and not for romantic people like me who are looking at it from far away."
Nevertheless, Bryce says he would probably vote No if he was eligible because of the uncertainty of the alternative. He quotes the ad hoc anthem , F lower of Scotland – "those days are passed now/and in the past they must remain" – as evidence the battles with England are the stuff of history.
But minutes later he can't help himself. "I know a lot people would like to give the English a kick up the bum. I know a lot of people in Scotland feel that way. They were not encouraged to have their own culture as part of the union for a long time".

Fairfax Media Management Pty Limited
Reply
#2
British bosses get Scottish independence jitters
DOW JONES NEWSWIRES SEPTEMBER 05, 2014 10:30PM

As polls narrow ahead of a referendum on Scottish independence, business leaders once confident Scotland would remain part of the UK are starting to get jittery.

"Two weeks away from the Scottish referendum, let's hope we're not actually going full-circle, that common sense prevails and that we're going to continue to draw strength from our long-standing union," said Michael Rake, chairman of telecom giant BT Group PLC and deputy chairman of Barclays PLC, in a speech in London on Wednesday.

Mr Rake, who is also the president of the Confederation of British Industry trade body, reflects a growing concern among major figures from the corporate world that Scots could vote for independence on September 18.

A poll released by YouGov earlier this week showed a surge in support for Scottish independence, giving a boost to the "yes" campaign and its leader, Alex Salmond, currently head of Scotland's semiautonomous government.

The YouGov poll, released on Tuesday, showed that the margin of voters opposed to independence over those in favor has shrunk to six percentage points from 22 points less than a month ago. Another poll, conducted last week by the Guardian newspaper and pollsters ICM following the second of two televised debates between the two sides, also showed support for Mr Salmond was rising.

Many executives feel that separation would bring uncertainty on issues including currency, tax and trade regulations, potentially hampering the ability of Scottish-based businesses to export around the world. Others, with more-global businesses, are put off by the years of complex negotiations that would follow a "yes" vote.

"Why on earth would it be a good thing for us?" said Ben van Beurden, chief executive of oil giant Royal Dutch Shell PLC, in an interview. "Purely from a business perspective, the difficulties and uncertainties that have to go through make you say I don't see an upside, only downside."

Mr van Beurden said Shell hadn't made any contingency plans for a separation, but he conceded that the company's operations wouldn't be significantly affected whichever way the vote goes. "It isn't as if the industry or our business will cease to exist," he said.

The Shell chief said he is "probably more" concerned about any UK exit from the European Union. "I'm much more worried about the implications for the UK and for Europe," he said.

UK Prime Minister David Cameron has promised a referendum on EU membership in 2017 should his Conservative party retain control of Parliament in next year's general election.

Still, an independent Scotland's membership in the EU would have to be renegotiated. A former senior European Commission official said earlier this week that Scotland would have to commit to using the euro to remain in the EU, contrary to the "yes" campaign's intention to use the pound in a monetary union with the UK.

Uncertainty surrounding Scotland's EU membership is a big concern for a number of global companies with operations in the country.

Diageo PLC and Pernod Ricard SA, the world's two largest liquor makers by sales, have both said access to the EU's free-trade agreements around the world is vital for the success of the Scotch whisky industry.

Scotch is a big part of the Scottish economy. Exports hit a record high of £4.3 billion ($US7.02 billion) in 2013, according to figures released in April by the Scotch whisky Association, making up nearly a quarter of all British food-and-drink exports.


"We haven't received answers to many of our questions" concerning independence, said Laurent Lacassagne, chairman and CEO of Chivas Brothers, on Wednesday. Chivas Brothers, maker of Scotch brands Chivas Regal and the Glenlivet, is part of Pernod Ricard.

But independence campaigners say a separate Scotland is the best way for businesses to guarantee a place in the EU.

"The last thing we want is to be stuck in the middle of little Britain," said Ian McDougall, a board member with Business for Scotland, a pro-separation group. "The rest of Europe is a far bigger economy."

Some industries have been unaffected by the rising support for independence. Scotland's substantial financial sector, which manages £800 billion of funds, has felt almost no impact from the recent narrowing of the polls, according to Scottish Financial Enterprise, an industry body.

But for others, especially those based outside of Scotland, the approaching vote and convergence of opinion is cause for greater concern.

"I am in no doubt that the prosperity of the UK, the City of London and Lloyd's would be best served by Scotland staying in the UK and a strong United Kingdom staying in a competitive and efficient EU," said John Nelson, chairman of Lloyd's of London, the 325-year-old insurance market. Mr Nelson was speaking at an annual dinner hosted by Lloyd's earlier this week.

Separation backers say the recent outbursts from leading business figures reflects the fact that many are finally coming to the realisation that Scotland could become an independent nation, having previously assumed a "no" vote was a formality.

Companies and executives on both sides of the debate have turned up the heat in recent weeks. Last week, in an open letter to the Scotsman newspaper, 130 top business people -- including the chief executive of BHP Billiton Ltd. and the chairman of HSBC Holdings PLC -- said "the business case for independence hasn't been made."

Not to be outdone, independence campaigners responded the next day with their own letter, signed by 200 executives.

But for Business for Scotland's Mr McDougall, who also runs an accounting firm in Glasgow, the business case for independence is a simple one.

"We want to use the wealth that Scotland's got to create a wealthier country," he said.
Reply
#3
UK offers Scots new powers after poll
AFP SEPTEMBER 08, 2014 12:00AM

The British government scrambled to pledge greater autonomy for Scotland, after a poll put the pro-independence camp ahead just 11 days before the referendum on separation.

Finance Minister George Osborne said greater tax and spending powers would be announced in the coming days and would be implemented if Scotland votes on September 18 to remain in the 300-year-old union with England.

The government's offer came after a YouGov poll published in The Sunday Times newspaper gave the "Yes" camp 51 per cent support compared to the "No" camp's 49 per cent, excluding undecided voters. Six per cent said they had not made up their minds.

Although the two-point lead is within the margin of error, the findings dramatically up the stakes ahead of the vote.

"Scotland faces a very big choice," Osborne told BBC.

"If people were in any doubt that they can stay at home, that they don't need to go out to the polls and vote 'No' to avoid separation, they won't be in that doubt today.

"They should also be in no doubt about the consequences of this decision," the chancellor of the exchequer added.

"No ifs, no buts: we will not share the pound if Scotland separates from the rest of the UK."

He said sharing the currency after independence would be equivalent to a couple divorcing but keeping a joint bank account.

Salmond says he would refuse to take on Scotland's share of the United Kingdom's debt post-independence if he does not get his way on a euro-style cross-border currency union.

Osborne said it was "clear" that Scots wanted greater autonomy and the three main United Kingdom-wide parties - the Conservatives, their Liberal Democrat junior partners in government and the Labour opposition - had agreed to "deliver" on that.

"You will see in the next few days a plan of action to give more powers to Scotland. More tax powers, more spending powers, more plans for powers over the welfare state," he said.

"Then Scotland will have the best of both worlds.

Any vote for Scotland to leave the UK would raise questions about Britain's standing in the international community and could put pressure on British Prime Minister David Cameron to stand down.

Scotland represents one-third of Britain's landmass and is home to Britain's submarine-based Trident nuclear deterrent, which the SNP says must be out of an independent Scotland by 2020.

The Better Together campaign, which backs Scotland staying in Britain, has been ahead in opinion polls for months but its lead has narrowed in recent days.
Reply
#4
Reply
#5
"... but quitting while you're ahead is not the same as quitting." - Quote from the movie American Gangster
Reply
#6
Brave heart laid the foundation of the rallying call? Smile

If Scotland goes independent it would be a black swan event. Decline of UK and the pound will be complete. Domino effect on Northern Ireland will be very possible
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward

Think Asset-Business-Structure (ABS)
Reply
#7
they have zero military spending as of now, I suppose if they really split the british could give them some things but once you have a defence budget overhead every year to cover things start getting expensive.

imho it makes more sense to continue with british pound after seperating that way they can still piggyback each other and the scots can buy things and trade with it.
Reply
#8
http://money.cnn.com/2014/09/09/news/sco...l?iid=Lead

5 reasons to worry about Scottish vote
By Alanna Petroff @AlannaPetroff September 9, 2014: 8:03 AM ET
map scotland split
Recent opinion polls show Scots could vote to break away from the United Kingdom on September 18.
LONDON (CNNMoney)
Investors are selling British stocks and the pound before Scotland votes next week on whether to break away from the United Kingdom.
A vote in favor of independence would end a 307-year union with England and have far reaching consequences for the economy, currency, banks and industry. There could also be knock-on effects across Europe.
Here are five things you need to know:
1. Currency mess: The pound hit a 10-month low against the dollar this week as opinion polls swung in favor of voters who want to break away from the U.K.
Uncertainty over which currency an independent Scotland will use, and the impact of a messy divorce on the U.K. economy, is largely to blame.
Independence campaigners want to continue to use the pound in a currency union with England, but U.K. lawmakers say they're not ready to share. And even if they were, the Bank of England would likely insist on tough budget rules that could mean painful austerity for Scotland.
Scottish nationalist leader Alex Salmond has refused to outline a 'Plan B', though he's hinted that Scotland may continue to use the pound without U.K. permission. Another option would be to create a new, untested currency.
The euro, if an option at all, would be years away. (See "EU: In or out?" below.)
Related: High roller bets $671,000 on Scotland's fate
2. The debt debate: In an early move to reassure markets, the U.K. government said it would honor all its debts -- including Scotland's share -- if there is a split.
However, under this scenario, an independent Scotland would owe Britain as much as £130 billion -- or roughly 10% of total U.K. public debt.
Supporters of independence say they're ready to pay, and are confident Scotland could manage its debts with greater ease once independence is established.
However, credit ratings agency Standard & Poor's cautions that Scotland's economy -- which would be similar in size to Portugal -- would be less resilient to shocks because of its greater dependence on volatile earnings from the oil and gas industry.
3. All about oil: The U.K. is the largest oil producer in the EU, and about 90% comes from areas that are likely to be claimed by an independent Scotland.
The U.K. is also likely to want a share of current production and reserves, but most analysts expect an agreement could be reached on divvying up the assets.
There are deeper divisions, however, over how much the remaining oil is worth -- a calculation of much greater significance to the future of the Scottish economy.
Independence campaigners estimate Scotland's remaining oil is worth about £1.5 trillion. The U.K. government says it's less than one-tenth of that figure.
Related: The world's most expensive whisky
4. A financial giant: Shares in British financial institutions based in Scotland, such as Royal Bank of Scotland (RBS) and Lloyds (LYG), have been battered by concerns that a vote in favor of independence could damage their business. RBS has said it could hurt its credit rating and raise costs.
Scotland's outsized banking sector would be 12 times the size of its economy, raising concerns about the country's ability to deal with a future financial crisis.
Large banks and insurers may even be forced to move their headquarters out of Scotland and into London.
Leading this potential migration could be investment firm Standard Life (SLFPF), which has been based in Scotland for roughly 190 years.
"If anything were to threaten [our business] we will take whatever action we consider necessary -- including transferring parts of our operations from Scotland," said Standard Life chairman, Gerry Grimstone.
Pound slides on Scottish uncertainty
Pound slides on Scottish uncertainty
5. EU: In or out? Independence campaigners want Scotland to remain in the EU.
But an independent Scotland would most likely be treated as a new state, and therefore have to apply for membership. That process can take years and all 28 members would have to approve the application -- something some may be reluctant to do for fear of encouraging their own separatist movements.
And there's another potential sting in the tail that could be far more damaging for the U.K.
Prime Minister David Cameron has promised a vote on Britain's membership of the EU by the end of 2017, assuming he wins next year's election.
"For the rest of the U.K., losing relatively pro-EU Scotland would raise the risk of a Brexit from the EU," warned Robert Wood, chief UK economist at Berenberg bank.
First Published: September 9, 2014: 8:03 AM ET
Reply
#9
Financial fears over Scottish independence
AFP SEPTEMBER 11, 2014 5:15AM

News that Scotland's pro-independence campaign has overtaken the Stay Together camp for the first time, ahead of next week's referendum, has sent shockwaves through London financial markets.

A surprise opinion poll caught many investors off-guard when it showed that Scotland's "Yes" campaign has carved out a two-point lead over the "No" camp, sparking a scramble for votes before the September 18 referendum.

The British pound tumbled Wednesday to a 10-month low at $US1.6052, a level last seen in November 2013. It also slid against the euro as risk-averse investors sold off positions.

Share prices of companies with major Scottish operations -- like Royal Bank of Scotland and Lloyds Banking Group -- have also fallen sharply since Friday.

There are "huge uncertainties about the costs of separation, the impact on growth and the currency regime for an independent Scotland", Rabobank analyst Jane Foley said.

In addition, she highlighted speculation that the date of Britain's general election -- due in May 2015 -- could be moved, given the possible need to make electoral changes.

The pro-independence governing Scottish National Party (SNP) -- led by First Minister Alex Salmond -- is chasing the "Yes" vote. Britain's main political parties are all in the "No" camp.

Prime Minister David Cameron's Conservative-Liberal Democrat coalition government has vowed that an independent Scotland will not be allowed to keep using the pound.

As the independence campaign has gained momentum since July, the pound has shed about 6.6 per cent of its value against the US dollar.

"There is now no question that the momentum is now all with 'Yes'," Deutsche Bank foreign exchange strategist Oliver Harvey said.

"The implications of a 'Yes' vote would be huge, and are magnified by the sense of institutional unpreparedness," he added, noting the Treasury has only just set up a special team.

"On the currency side, it could at worse lead to a destabilising crisis in the whole British banking system and at best leave the rest of the UK with an unstable currency union in which the Bank of England (BoE) is forced to continue to provide liquidity to Scottish banks."

The British central bank has however drawn up contingency plans for a Scottish separation.

But BoE governor Mark Carney repeated Tuesday his opposition to any form of monetary union with an independent Scotland, arguing that "a currency union is incompatible with sovereignty".

Markets remain anxious about reported capital outflows from Scotland.

"We are already reading reports of capital flowing out of Scotland as uncertainty continues to rise," CMC Markets analyst Michael Hewson said.

However, Tom McPhail, head of pensions research at Hargreaves Lansdown, said clients had not shown signs of pulling money out.

"Nothing will change in the short term on September 19, so investors will have time to assess the consequences of the vote and to act accordingly," he told AFP.
Reply
#10
Scottish referendum: David Cameron begs Scots not to leave the UK
http://www.telegraph.co.uk/news/uknews/s...he-UK.html
You can find more of my postings in http://investideas.net/forum/
Reply


Forum Jump:


Users browsing this thread: 12 Guest(s)